BEVERLY HILLS, CA-“I characterize 2010 as schizophrenic,” saidRoy March, CEO of Eastdil Secured LLC, at Allen Matkins’ thirdannual View From the Top. March, who served as the event’s firstkeynote speaker, pointed out that the “global markets areconfused,” and that this year has been a “real stop-start” kind ofyear.

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March was one of a number of speakers at the annual event whoseremarks suggested that the economy, the debt markets and realestate continue to send a host of mixed signals, both good andbad―and that conditions often seem to change from monthto month or week to week.

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For example, March explained that from January to April, itseemed like the crisis was solved and everyone had a somewhat“bullish” outlook, like “why sell now?” May and early June rolledaround and sovereign debt fears created major volatility, he said.Then in late June, all seemed like it was going to be OK.

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Some current themes in the debt and equity markets, according toMarch, include lack of yield that has pushed spreads higher inevery asset class—even with record low treasury yields; there-emergence of CMBS, which is now positioned to grow; a marketthat is split into "haves" and "have-nots,"; increasing distressedasset but still not a flood; aggressive activity by public andprivate REITs; and sellers returning to the market.

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There is still this looming maturity issue that is floatingaround out there, March said, but he added, “It is expected thatmany of these loans will get extended.” Some other conclusions or“takeaways” from March include: “We are at that stage in 2010/2011where peak defaults will hit, leading to increased sales activity;”the tone in the debt market, has been extremely positive in thelast 20 to 45 days and yields have compressed 50 to 100 bps;fundamentals are still declining, but investors anticipate arecovery over the next 12 to 24 months and are looking to buy now;trophy investors are focused on cash yields; note value and realestate value are converging; and there is a lack of quality assetson the market, which has led to a “scarcitypremium.”

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Next up was keynote speaker John B. Kilroy Jr., president andCEO of Kilroy Realty Corp., who provided a brief market overviewand discussed how it has affected Kilroy as a company. “Leasingmomentum has improved but the market remains choppy,” he explained.Demand, he said, is coming from several sectors including media,technology, healthcare, software and entertainment. As for rents,Kilroy said that they have generally stabilized buy there is nosign of rent growth yet. There is very little in the way ofconstruction, he pointed out, and as for acquisitions, he said that“there has been a tremendous increase in volume.”

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He pointed out that KRC had has a very consistent strategy overthe years. “Buy when it makes sense, develop when it makes sense,and do neither when it makes sense,” he said. One of the company’sstrategies is to pursue opportunities along the West Coast,targeting opportunities with characteristics such as have a valueadd component through lease-up and have significant amenitiesincluding access to transportation to name just a few.

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In the acquisitions market, Kilroy said that the opportunitiesare fewer and more competitive than anticipated. “Blend and extendby lenders has limited the predicted tsunami of deals,” he said.Cap rates are ranging from 5% to 7% for quality assets and lowinterest rates are pushing down cap rates, he said. “Financialcapacity and surety of execution are key,” he explained. “Mostproperties today have above-market leases if they have any leasesand in some cases, buyers are under-estimating capital expenditureneeds.”

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Development is the other growth engine at Kilroy, he explained,pointing out that the company is focused on positioning itself forfuture development. “Our focus is on improving entitlements. We arecurrently expanding entitlements on existing land and buildings tomaximize flexibility and increase value,” he said.

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Kilroy’s outlook? “Expect California to be choppy,” he said.“The cyclical nature of real estate will continue. We are alreadyseeing more availability of debt at lower costs.” Not only is itcyclical, he explained, but it is volatile. “Who knows what’s goingto happen.” Like March, he expects continued competition forquality assets in the acquisitions market. “Now is the time to takeadvantage of opportunities,” he pointed out. “Make sure you have agood team, hope for the best and plan for the worst.”

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Check back for more coverage from the Allen Matkinsevent.

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.